Tonga Institute of Higher EducationIT 245Management Information SystemsLecture 9

Electronic Business & Commerce Systems

E-Business SystemsUse of the Internet and other networks and the Information Technologies :to support electronic commerce, enterprise communications and collaboration,and web-enabled business processes, both within an inter-networked enterprise and with its customers and business partners.E-business redefines the old business models, with the aid of new technology, to maximize customer value.

E-commerceBuying and selling of goods and services over digital media ( e.g. internet, extranets etc).

E-business Application ArchitectureDifferent functions in the business are conducted in an integrated manner.To understand it best, we must learn the functional systems in a business first.Lets look at the following diagram

Example of functional business information systems. Note how they support the major functional areas of business.

Functional Systems in a business 1 of 2From the diagram earlier onMarketing Systems: Interactive Marketing, Targeted Marketing, Sales force Automation.Manufacturing Systems: CIM, CAM, MES, Process Control, Machine Control, RoboticsHuman Resource Systems:HRM and Internet/Intranets, Staffing & Training.

Functional Systems 2 of 2Accounting Systems: AIS : Book-keeping, Financial Budget & Forecasting, Analytical Reports.Online Accounting Systems, Order Processing, Inventory Control, AR, AP, Payroll, GL.Financial Management Systems : Cash Management, OL Investment Management, Capital Budgeting, Financial Forecasting and Planning.For different components & the interrelationships of AIS, see the following diagram.

Important accounting information systems for transaction processing and financial reporting. Note how they are related to each other in terms of input and output flows

E-business Application Architecture 1 of 2It integrates the various components systems into one coherent cross-functional whole system.ERP integrates the logistic, production and distribution functions.CRM integrates marketing, sales & customer service.Supply CM interacts with suppliers and their vendors. Selling CM interacts with customers and resellers.HRM/Admn Control module interacts with employees & keeps general control.

E-business Application Architecture 2 of 2Accounting module keeps the books of accounts, Financial & Management Control module monitors the financial & operational performance and interacts with the auditors and shareholders.The cross-functional nature of the systems ensures seamless performance with speed, ease and sans bottlenecks.

Four backbones of E-business SystemsEnterprise Resource Planning (ERP): SAPCustomer Relationship Management(CRM) :Siebel Systems.Supply Chain Management(SCM) : i2 Technologies.On Line Transaction processing(OLTP)

End of Electronic Business Systems

and Begin withElectronic Commerce Systems

Scope of E-CommerceE-Commerce : Buying and Selling of goods and services using Internet-based Technologies, EDI etc.Business-to-Consumers : B2C: Electronic Marketplace or Web-store.Business-to-Business :B2B : E-Exchanges, B2BAuction sites, use of EDIConsumers-to-Consumers : C2C: Auction sites like eBay

The Software components and functions of an integrated E-commerce system. This architecture would enable a business to use the Internet, intranets and extranets to accomplish E-commerce transactions with customers, business customers and business partners.

E-Commerce Technologies1 of 2The Internet, Intranets and Extranets : Foundation of E-Commerce.Customer-Interface: Push and Pull Technologies, Profiling, Web-usage Analysis, Electronic Catalog, Online Community, Billing, Secure payments.Employee Interface: Communications server, Groupware, Document Management

E-Commerce Technologies2 of 2Trading partner Interface : Extranet connecting the computer systems of business partners, Supply Chain Management, data warehousing, Decision Support Systems, Internet/EDI.Security measures : Fire walls, Authentication and Encryption Software.

This E-commerce process architecture highlights nine essential categories of E-commerce processes.

Essential E-commerce Processes 1 of 5Access Control & Security : To ensure right users have right amount of access. Business resources are protected from hackers, theft of passwords, credit card numbers, virus.Profiling & Personalizing: Building E-Profiles of customers based on their likings, preferences, Personalized web page. Part of CRM.

Essential E-commerce Processes 2 of 5Search Management : helps customers find a specific products. Content-based search, Parametric based search, Content & Catalog Management : CM SW helps EC companies to develop, generate, deliver, update and archive text as well as multimedia information on product and services offered. Mass customization : Dell & Cisco: Build to order PCs & Networks.

Essential E-commerce Processes 3 of 5Workflow Management : Streamlines internal processes by collaborating work of employees. Sets & monitors predefined rules , authorization requirements, databases to be used, sequence of tasks etc. Ensures that proper transactions, decisions & work activities are performed. Correct data & documents are routed to right employees, customers, suppliers & other stakeholders.

Essential E-commerce Processes 4 of 5Event Notification: Multiple events take place in E-transactions. EC systems are event-driven. Event must be notified to different parties involved in the transactionsCollaboration & Trading : Online/auction Sites for collective buying/selling requires collaboration between business partners. See the following diagram.

Example of the B2B procurement marketplace formed by major corporations in various industries.

Essential E-commerce Processes 5 of 5Electronic Payment : Most important process. Involves transfer of funds and related confidential information. A variety of payment systems evolved over time :Web Payment processes : Cr Card.Electronic Fund Transfer(EFT): Cr/Dr CardMicropayment systems: Cybergold / Qpass : Digital cash, electronic scrip or e-cash.Secure E Transactions(SET): Agreed by all major players. Will become dominant Std.

E-Commerce Applications & Issues : Section IIE-Commerce has created new channels for customers and sellers to do business. E-Commerce will become the key industry driver in the new millennium.But there are a variety of E-Commerce alternatives. Great care is required in identifying the right alternative for your business.See the following diagram to study trends in E-Comm

Trend in B2C and B2B E-Commerce, and the business strategies and value driving these trends.

E-commerce Success FactorsAdvantage of centralized location is gone. Businesses must find ways to build customer satisfaction, loyalty and long-term relationships with the customers.Success factors : (1) Selection & Values (2) Performance & service (3) Look & Feel of Site (4)Advertising & Incentives (5) Personal Attention (6) Community Relationships (7) Security & Reliability

These Web store requirements must be implemented by a company or its website hosting service, in order to develop a successful E-commerce business.

Web Store Requirements 1 of 3Developing a Web Store :Build Storefront & Product Catalog Web pages, Shopping cart, Process Orders, Payment procedures. Marketing of web store: web Advertising, Exchange programs, Register your own domain name. Problem of net Squatters.Register your web site with major web search engines & directories, affiliating as a small business partners with major web portals like Yahoo!MS bCentral, Netscape

Web Store Requirements 2 of 3Serving Your Customers: Serve personally & efficiently. Create user profiles, Personal Web pages, automatically identifying returning customer with cookie files, presenting preferred products, shopping Cart system.Provide Customer Support : Free info in FAQs, Tutorials, Related sites, Discussion Groups, Chat Rooms.

Web Store Requirements 3 of 3Managing a Web Store: web site usage statistics, Sales & Inventory reports link to Accounting System.24 x 7 Web site hosting, Online tech support, scalable network capacity.Password protection, Encrypted website administration, Firewalls & security monitors to protect customers.

Business-to-Business E-CommerceWhole sale.Use of WWW, Corporate Intranet & Extranet, EDI.Applications include : E Catalog, e trading : Exchange, auction portals etc.EFT for payments.

E Commerce MarketplacesInfomediaries: Charge commission on every transaction that is concluded e.g. Ariba, FreeMarkets, VerticaNet etc.

E Commerce MarketplacesThe following diagram depicts the architecture for B2B E-Commerce Web Portal offering exchange, auction( where buyers make bids) and reverse auction (where sellers make bids)

Electronic Data Interchange (EDI)Private networks connecting different businesses engaged in E Commerce e.g. Ford Motors and its vendors.Communications between computer systems of the participants without paper documents or human intervention. Expensive.Being replaced by internet-based EDI.

Clicks & Bricks in E CommerceE Commerce also requires old fashioned back office physical business processes.No universal Clicks & Bricks E Commerce strategy for all businesses.Some businesses are spinning off (separating) their E com section from traditional business division, others are integrating E com with traditional division.

SummaryCross-Functional E-Business SystemsFunctional E-Business SystemsE-Commerce FundamentalsE-Commerce Applications and Issues